Figure 17-3 -Refer to Figure 17-3. Suppose the Economy Is at Point

Multiple Choice

Figure 17-3
-Refer to Figure 17-3. Suppose the economy is at point a. The rational expectations hypothesis suggests that an increase in aggregate demand will result in the economy moving from

A) point a to point d whereas new Keynesian economics suggests that it will move point a to point b.
B) point a to point d whereas new Keynesian economics suggests that it will move point a to point c.
C) point a to point b whereas new Keynesian economics suggests that it will move point a to point d.
D) point a to point c whereas new Keynesian economics suggests that it will move point a to point d.